March 15, 2004

 

            The Oil and Gas Conservation Commission met on March 15, 2004 at 10:00 a.m. in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, for a hearing in Cause Nos. 1V (13 matters), 300 (2 matters), and 318.

           

            Those present were:

 

                        Peter Mueller                         Chair

                        Brian Cree                             Vice Chair

                        John Ashby                            Commissioner

                        Tom Ann Casey                    Commissioner

                        Mike Klish                              Commissioner

                        Tom Reagan                         Commissioner

                        Richard Griebling                  Director

Brian Macke                          Deputy Director

                        Patricia Beaver                     Hearings Manager

 

            The Commission unanimously approved the minutes from the February hearing.

                       

            Executive Director’s Report:  Russell George, Executive Director of the Natural Resources Department, wanted to say hello to the Commission and to let them know that he is available should the Commission require any help.  Shane Henry, DNR Assistant Director provided an update on the new State Geologist, Vince Matthews.  A task force to review drilling and spacing units is being assembled that will result in a document describing how mineral owners will participate in receiving royalties.  Chair Mueller asked Executive Director George about the starting time of the hearings.  Executive Director George said he believes that the starting time for hearings should consider an accommodation to the people who live outside of Denver who have to drive in for the hearings.

                               

            Director’s Report:  Director Griebling provided a written report and Deputy Director Macke discussed the following: Statistics are projected at 2500 Applications for Permits-to-Drill for the year, which will be a record since the present record was set back in 1981.  The next Northwest Oil and Gas Forum will be held on May 27, 2004 in a facility that will a have P.A. system.  Property taxes in Garfield County have doubled and will probably double again this year as described in an attached newspaper article.  Deputy Director Macke had an opportunity to speak at a meeting of the Glenwood Springs Association of Realtors.  Colorado Oil and Gas Conservation Commission (“COGCC”) staff members Randall Ferguson, Kevin Lively, Ed DiMatteo and Brian Macke attended the Northeast Colorado COGA meeting.  COGCC Operations Manager Morris Bell and staff member Debbie Baldwin will be attending a GORT meeting next week.  COGCC staff member Loren Avis and Anthony Gorody presented the Raton Basin Study to Las Animas and Huerfano counties.  The next Water Quality Control Commission/COGCC meeting is tomorrow at 10:30 a.m. in the COGCC conference room.  Deputy Director Macke introduced the new GIS Administrator, Karen Morgan, who joins us from the Colorado Geological Survey.  The 2003 Outstanding Oil and Gas Operations Award nominations are due June 4, 2004 and will be presented in August 2004 at the COGA Natural Gas Conference.  Deputy Director Macke attended a meeting held only for counties to discuss gas gathering rules.   The counties will meet again on April 8, 2004.  An Inactive Wells Review update has been completed by COGCC Operations Manager Morris Bell and COGCC Information Manager Thom Kerr resulting in sending out letters to operators regarding their under bonded inactive wells.  The Joint House and Senate Agriculture and Natural Resources Committee briefing from the COGCC was attended by Chair Mueller and Commissioner Reagan along with Deputy Director Macke and Director Griebling.  A budget request including an additional FTE and vehicle was approved by the Joint Budget Committee and is now being forwarded to the General Assembly for approval.  COGCC leased spacing negotiations are ongoing in an attempt to renegotiate our current lease and other spaces are being looked at as well.  COGCC Operations Manager Morris Bell and COGCC staff member Ed DiMatteo described ERF projects and costs.  Since 2000, the average cost to plug a well has been $11,031.  The costs are high due to some environmental issues at several wellsites.  Commissioner Ashby believes that the bond amount should be different for exploratory wells than for development wells.  He asked about the number of single well bonds on file.

 

Assistant Attorney General’s Report:  AAG Harmon provided a written confidential litigation memo. 

 

Commissioner Comments:  Chair Mueller thanked Deputy Director Macke for his outreach efforts.  The Commissioners agreed to change the start time of hearings from 10:00 a.m. to 9:00 a.m. beginning in April.

 

Audience Comments:  Greg Schnacke, COGA, said that COGA is in favor of the budget request and would be open to future requests as industry activity increases.  Mr. Schnacke appreciates the Commissioners’ interest in presenting the Outstanding Operator Awards at the COGA National Gas Conference.  COGA is trying to explore ways to determine economic impacts from oil and gas operations.  Mr. Schnacke believes Garfield County has been targeted by environmental groups due to the Roan Plateau issue.

 

Ken Wonstolen, COGA, believes a gas gathering rulemaking may not go forward as he had previously expected and it is likely that there will not be a consensus rulemaking proposal.  The Air Pollution Control Commission’s two (2) day hearing on ozone last week resulted in a rule.  The rule is flexible in that it allows oil and gas operators to place controls on the wells they believe are most needed.  Operators have to demonstrate that controls have been placed on wells by April 2006.  Controls must be in place on 46% of the wells by April 2007.  Seven hundred to eight hundred enclosed flare units will be required in the Wattenberg Field in approximately eighteen months at an installation cost of approximately $10 million.

 

A presentation on San Juan Basin Monitoring from the 3M Project was made.  John Peterson from LT Environmental provided an overview of the Fruitland Coal monitoring program.  COGCC Environmental Supervisor Debbie Baldwin provided an overview of the Fruitland Coal pressure and outcrop monitoring, water well sampling and complaint response.  Comments were made by Rusty Reise of BP, Paul Oldaker and Mike Wozniak.  Steve Clay, La Plata County LGD, raised issues primarily concerning safety.

 

Cause No. 407, Docket No. 0401-UP-01, request for an order to pool all non-consenting owners in the 80-acre drilling and spacing unit consisting of the W½ SW¼ of Section 34, Township 6 North, Range 67 West, 6th P.M. for the development and operation of the Codell/Niobrara Formation was withdrawn.

 

Cause No. 407, Docket No. 0402-UP-02, request for an order to pool all non-consenting owners in the 80-acre drilling and spacing unit consisting of the E½ SW¼ of Section 34, Township 6 North, Range 67 West, 6th P.M. for the development and operation of the Codell/Niobrara Formation was withdrawn.

 

Cause No. 112, Docket No. 0403-AW-05, request for an order to allow a second well to be completed in an existing 320-acre drilling and spacing unit in the S½ of Section 12, Township 33 North, Range 10 West, N.M.P.M. for the production of gas and associated hydrocarbons from the Fruitland coal seams was continued to the April hearing.

 

Cause No. 1, Docket No. 0403-GA-02, request for a variance to notice only those mineral owners affected by a forced pooling application instead of all the mineral owners in the University 9-1 Well, located in the SE¼ SW¼ of Section 9, Township 34 North, Range 9 West, N.M.P.M. was continued to the April hearing.

 

Consent Agenda:  The Commission unanimously approved all matters on the consent agenda, which included the following:

 

Cause No. 300, Docket No. 0402-AW-01, request for an order to allow up to four (4) wells to be drilled in the existing 160-acre drilling and spacing units located in certain sections of Township 2 South, Ranges 43 and 44 West, 6th P.M. and Township 3 South, Range 43 West, 6th P.M. for the production of gas and associated hydrocarbons from the Niobrara Formation.

 

Cause No. 318, Docket No. 0402-AW-02, request for an order to allow up to three (3) wells to be drilled in the existing 160-acre drilling and spacing units located in certain sections of Township 1 North, Range 45 West, 6th P.M. for the production of gas and associated hydrocarbons from the Niobrara Formation.

 

Cause No. 300, Docket No. 0403-AW-04, request for an order to allow up to four (4) wells to be drilled in the existing 160-acre drilling and spacing units located in certain sections of Township 1 South, Range 43 West, 6th P.M., Township 2 South, Ranges 43 and 44 West, 6th P.M. and Township 3 South, Ranges 43 and 44 West, 6th P.M. for production of gas and associated hydrocarbons of the Niobrara Formation.

 

Cause No. 1V, Docket No. 0403-OV-07, request to approve an Administrative Order by Consent finding Petroleum Development Corporation in violation of Rules 303.b., 301. and Section 34-60-117.(1) of the Oil and Gas Conservation Act, failure to have an approved Application for Permit-to-Drill or Application for Permit to Recomplete to the Codell Formation, not providing written notice of intention to do work and to protect correlative rights of all owners in every field or pool for the Bujalski #41-25 Well located in the NE¼ NE¼ of Section 25, Township 4 North, Range 68 West, 6th P.M., and assessing a fine of five thousand dollars.

 

Cause No. 1V, Docket No. 0403-OV-08, request to approve an Administrative Order by Consent finding Petroleum Development Corporation in violation of Rules 303.b., 301. and Section 34-60-117.(1) of the Oil and Gas Conservation Act, failure to have an approved Application for Permit-to-Drill or Application for Permit to Recomplete to the Codell Formation, not providing written notice of intention to do work and to protect correlative rights of all owners in every field or pool for the Wyscaver #23-5 Well located in the NE¼ SW¼ of Section 5, Township 4 North, Range 63 West, 6th P.M., and assessing a fine of five thousand dollars.

 

Cause No. 1V, Docket No. 0403-OV-09, request to approve an Administrative Order by Consent finding Petroleum Development Corporation in violation of Rules 303.b., 301. and Section 34-60-117.(1) of the Oil and Gas Conservation Act, failure to have an approved Application for Permit-to-Drill or Application for Permit to Recomplete to the Codell Formation, not providing written notice of intention to do work and to protect correlative rights of all owners in every field or pool for the Bryce #21-28 Well located in the NE¼ NW¼ of Section 28, Township 2 North, Range 64 West, 6th P.M., and assessing a fine of five thousand dollars.

 

Cause No. 1V, Docket No. 0403-OV-10, request to approve an Administrative Order by Consent finding Petroleum Development Corporation in violation of Rules 303.b., 301. and Section 34-60-117.(1) of the Oil and Gas Conservation Act, failure to have an approved Application for Permit-to-Drill or Application for Permit to Recomplete to the Codell Formation, not providing written notice of intention to do work and to protect correlative rights of all owners in every field or pool for the Gutterson #23-17 Well located in the NE¼ SW¼ of Section 17, Township 3 North, Range 63 West, 6th P.M., and assessing a fine of five thousand dollars.

 

Cause No. 1V, Docket No. 0403-OV-11, request to approve an Administrative Order by Consent finding Petroleum Development Corporation in violation of Rules 303.b., 301. and Section 34-60-117.(1) of the Oil and Gas Conservation Act, failure to have an approved Application for Permit-to-Drill or Application for Permit to Recomplete to the Codell Formation, not providing written notice of intention to do work and to protect correlative rights of all owners in every field or pool for the Jeffers #41-35 Well located in the NE¼ NE¼ of Section 35, Township 4 North, Range 68 West, 6th P.M., and assessing a fine of five thousand dollars.

 

Cause No. 1V, Docket No. 0403-OV-12, request to approve an Administrative Order by Consent finding Petroleum Development Corporation in violation of Rules 303.b., 301. and Section 34-60-117.(1) of the Oil and Gas Conservation Act, failure to have an approved Application for Permit-to-Drill or Application for Permit to Recomplete to the Codell Formation, not providing written notice of intention to do work and to protect correlative rights of all owners in every field or pool for the Knox #41-3 Well located in the NE¼ NE¼ of Section 3, Township 5 North, Range 67 West, 6th P.M., and assessing a fine of five thousand dollars.

 

Cause No. 1V, Docket No. 0403-OV-13, request to approve an Administrative Order by Consent finding Petroleum Development Corporation in violation of Rules 303.b., 301. and Section 34-60-117.(1) of the Oil and Gas Conservation Act, failure to have an approved Application for Permit-to-Drill or Application for Permit to Recomplete to the Codell Formation, not providing written notice of intention to do work and to protect correlative rights of all owners in every field or pool for the NHF #13-9 Well located in the NW¼ SW¼ of Section 9, Township 5 North, Range 63 West, 6th P.M., and assessing a fine of five thousand dollars.

 

Cause No. 1V, Docket No. 0403-OV-14, request to approve an Administrative Order by Consent finding Petroleum Development Corporation in violation of Rules 303.b., 301. and Section 34-60-117.(1) of the Oil and Gas Conservation Act, failure to have an approved Application for Permit-to-Drill or Application for Permit to Recomplete to the Codell Formation, not providing written notice of intention to do work and to protect correlative rights of all owners in every field or pool for the NHF #32-21 Well located in the SW¼ NE¼ of Section 21, Township 5 North, Range 63 West, 6th P.M., and assessing a fine of five thousand dollars.

 

Cause No. 1V, Docket No. 0403-OV-15, request to approve an Administrative Order by Consent finding Petroleum Development Corporation in violation of Rules 303.b., 301. and Section 34-60-117.(1) of the Oil and Gas Conservation Act, failure to have an approved Application for Permit-to-Drill or Application for Permit to Recomplete to the Codell Formation, not providing written notice of intention to do work and to protect correlative rights of all owners in every field or pool for the Wells Ranch #23-11 Well located in the NE¼ SW¼ of Section 11, Township 5 North, Range 63 West, 6th P.M., and assessing a fine of five thousand dollars.

 

Cause No. 1V, Docket No. 0403-OV-16, request to approve an Administrative Order by Consent finding Petroleum Development Corporation in violation of Rules 303.b., 301. and Section 34-60-117.(1) of the Oil and Gas Conservation Act, failure to have an approved Application for Permit-to-Drill or Application for Permit to Recomplete to the Codell Formation, not providing written notice of intention to do work and to protect correlative rights of all owners in every field or pool for the Wells Ranch #32-3 Well located in the SW¼ NE¼ of Section 3, Township 5 North, Range 63 West, 6th P.M., and assessing a fine of five thousand dollars.

 

Cause No. 1V, Docket No. 0403-OV-17, request to approve an Administrative Order by Consent finding Elm Ridge Resources in violation of Rules 906.b.(3) and 906.c., failure to report a spill to the COGCC and to consult with the landowner prior to commencing operations to remediate a spill, and assessing a fine of two thousand dollars.

 

Cause No. 1V, Docket No. 0403-OV-18, request to approve an Administrative Order by Consent finding Petrogulf Corporation in violation of Rules 305.b.1., 306., and 306.a., failure to provide thirty (30) days notice to surface owner, to consult with the affected surface owner and to provide information to the landowner and local governmental designee for the Hand 8-44V Well located in Section 8, Township 33 South, Range 67 West, 6th P.M., and assessing a fine of three thousand dollars.

 

Cause No. 1V, Docket No. 0403-OV-19, request to approve an Administrative Order by Consent finding DeClar Oil & Gas, Inc. in violation of Rules 324A., 907.a., 910.a., 1004.a., and 1004.b., failure to prevent significant adverse environmental impacts to air, water, soil, or biological resources, to prevent the unauthorized discharge or disposal of E&P waste, to ensure that E&P waste is properly stored, handled, transported, treated, recycled or disposed to prevent threatened or actual significant adverse environmental impacts, for exceeding the allowable concentrations for soil in Table 910-1 and for failure to complete final reclamation within three (3) months for cropland at the former Stites #1 tank battery located in the NE¼ SE¼ of Section 17, Township 1 South, Range 56 West, 6th P.M., and assessing a fine of one thousand dollars.

 

The meeting adjourned at 3:05 p.m.

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            The Secretary was therefore authorized to issue the following orders:

 

Order No. 300-8, Beecher Island Field, Yuma County:  Approves the request by Petroleum Development Corporation for an order allowing up to four (4) wells to be drilled in the existing 160-acre drilling and spacing units located in certain sections of Township 2 South, Ranges 43 and 44 West, 6th P.M. and Township 3 South, Range 43 West, 6th P.M. for the production of gas and associated hydrocarbons from the Niobrara Formation.

 

Order No. 318-8, Republican Field, Yuma County:  Approves the request by Petroleum Development Corporation for an order allowing up to three (3) wells to be drilled in the existing 160-acre drilling and spacing units located in certain sections of Township 1 North, Range 45 West, 6th P.M. for the production of gas and associated hydrocarbons from the Niobrara Formation.

 

Order No. 300-9, Beecher Island Field, Yuma County:  Approves the request by Mountain Petroleum Corporation for an order allowing up to four (4) wells to be drilled in the existing 160-acre drilling and spacing units located in certain sections of Township 1 South, Range 43 West, 6th P.M., Township 2 South, Ranges 43 and 44 West, 6th P.M. and Township 3 South, Ranges 43 and 44 West, 6th P.M. for production of gas and associated hydrocarbons of the Niobrara Formation.

 

Order No. 1V-256, Weld County: Approves the Administrative Order by Consent finding Petroleum Development Corporation in violation of Rules 303.b., 301. and Section 34-60-117.(1) of the Oil and Gas Conservation Act, failure to have an approved Application for Permit-to-Drill or Application for Permit to Recomplete to the Codell Formation, not providing written notice of intention to do work and to protect correlative rights of all owners in every field or pool for the Bujalski #41-25 Well located in the NE¼ NE¼ of Section 25, Township 4 North, Range 68 West, 6th P.M. and assesses a fine of Five Thousand ($5,000) dollars.

 

Order No. 1V-257, Weld County:  Approves the Administrative Order by Consent finding Petroleum Development Corporation in violation of Rules 303.b., 301. and Section 34-60-117.(1) of the Oil and Gas Conservation Act, failure to have an approved Application for Permit-to-Drill or Application for Permit to Recomplete to the Codell Formation, not providing written notice of intention to do work and to protect correlative rights of all owners in every field or pool for the Wyscaver #23-5 Well located in the NE¼ SW¼ of Section 5, Township 4 North, Range 63 West, 6th P.M. and assesses a fine of Five Thousand ($5,000) dollars.

 

Order No. 1V-258, Weld County:  Approves the Administrative Order by Consent finding Petroleum Development Corporation in violation of Rules 303.b., 301. and Section 34-60-117.(1) of the Oil and Gas Conservation Act, failure to have an approved Application for Permit-to-Drill or Application for Permit to Recomplete to the Codell Formation, not providing written notice of intention to do work and to protect correlative rights of all owners in every field or pool for the Bryce #21-28 Well located in the NE¼ NW¼ of Section 28, Township 2 North, Range 64 West, 6th P.M., and assesses a fine of Five Thousand ($5,000) dollars.

 

Order No. 1V-259, Weld County:  Approves the Administrative Order by Consent finding Petroleum Development Corporation in violation of Rules 303.b., 301. and Section 34-60-117.(1) of the Oil and Gas Conservation Act, failure to have an approved Application for Permit-to-Drill or Application for Permit to Recomplete to the Codell Formation, not providing written notice of intention to do work and to protect correlative rights of all owners in every field or pool for the Gutterson #23-17 Well located in the NE¼ SW¼ of Section 17, Township 3 North, Range 63 West, 6th P.M., and assesses a fine of Five Thousand ($5,000) dollars.

 

Order No. 1V-260, Weld County:  Approves the Administrative Order by Consent finding Petroleum Development Corporation in violation of Rules 303.b., 301. and Section 34-60-117.(1) of the Oil and Gas Conservation Act, failure to have an approved Application for Permit-to-Drill or Application for Permit to Recomplete to the Codell Formation, not providing written notice of intention to do work and to protect correlative rights of all owners in every field or pool for the Jeffers #41-35 Well located in the NE¼ NE¼ of Section 35, Township 4 North, Range 68 West, 6th P.M., and assesses a fine of Five Thousand ($5,000) dollars.

 

Order No. 1V-261, Weld County:  Approves the Administrative Order by Consent finding Petroleum Development Corporation in violation of Rules 303.b., 301. and Section 34-60-117.(1) of the Oil and Gas Conservation Act, failure to have an approved Application for Permit-to-Drill or Application for Permit to Recomplete to the Codell Formation, not providing written notice of intention to do work and to protect correlative rights of all owners in every field or pool for the Knox #41-3 Well located in the NE¼ NE¼ of Section 3, Township 5 North, Range 67 West, 6th P.M., and assesses a fine of Five Thousand ($5,000) dollars.

 

Order No. 1V-262, Weld County:  Approves the Administrative Order by Consent finding Petroleum Development Corporation in violation of Rules 303.b., 301. and Section 34-60-117.(1) of the Oil and Gas Conservation Act, failure to have an approved Application for Permit-to-Drill or Application for Permit to Recomplete to the Codell Formation, not providing written notice of intention to do work and to protect correlative rights of all owners in every field or pool for the NHF #13-9 Well located in the NW¼ SW¼ of Section 9, Township 5 North, Range 63 West, 6th P.M., and assesses a fine of Five Thousand ($5,000) dollars.

 

Order No. 1V-263, Weld County:  Approves the Administrative Order by Consent finding Petroleum Development Corporation in violation of Rules 303.b., 301. and Section 34-60-117.(1) of the Oil and Gas Conservation Act, failure to have an approved Application for Permit-to-Drill or Application for Permit to Recomplete to the Codell Formation, not providing written notice of intention to do work and to protect correlative rights of all owners in every field or pool for the NHF #32-21 Well located in the SW¼ NE¼ of Section 21, Township 5 North, Range 63 West, 6th P.M., and assesses a fine of Five Thousand ($5,000) dollars.

 

Order No. 1V-264, Weld County:  Approves the Administrative Order by Consent finding Petroleum Development Corporation in violation of Rules 303.b., 301. and Section 34-60-117.(1) of the Oil and Gas Conservation Act, failure to have an approved Application for Permit-to-Drill or Application for Permit to Recomplete to the Codell Formation, not providing written notice of intention to do work and to protect correlative rights of all owners in every field or pool for the Wells Ranch #23-11 Well located in the NE¼ SW¼ of Section 11, Township 5 North, Range 63 West, 6th P.M., and assesses a fine of Five Thousand ($5,000) dollars.

 

Order No. 1V-265, Weld County:  Approves the Administrative Order by Consent finding Petroleum Development Corporation in violation of Rules 303.b., 301. and Section 34-60-117.(1) of the Oil and Gas Conservation Act, failure to have an approved Application for Permit-to-Drill or Application for Permit to Recomplete to the Codell Formation, not providing written notice of intention to do work and to protect correlative rights of all owners in every field or pool for the Wells Ranch #32-3 Well located in the SW¼ NE¼ of Section 3, Township 5 North, Range 63 West, 6th P.M., and assesses a fine of Five Thousand ($5,000) dollars.

 

Order No. 1V-266, La Plata County:  Approves the an Administrative Order by Consent finding Elm Ridge Resources in violation of Rules 906.b.(3) and 906.c., failure to report a spill to the COGCC and to consult with the landowner prior to commencing operations to remediate a spill, and assesses a fine of Two Thousand ($2,000) dollars.

 

Order No. 1V-267, Las Animas County:  Approves the Administrative Order by Consent finding Petrogulf Corporation in violation of Rules 305.b.1., 306., and 306.a., failure to provide thirty (30) days notice to surface owner, to consult with the affected surface owner and to provide information to the landowner and local governmental designee for the Hand 8-44V Well located in Section 8, Township 33 South, Range 67 West, 6th P.M., and assesses a fine of Three Thousand ($3,000) dollars.

 

Order No. 1V-268, Washington County:  Approves the Administrative Order by Consent finding DeClar Oil & Gas, Inc. in violation of Rules 324A., 907.a., 910.a., 1004.a., and 1004.b., failure to prevent significant adverse environmental impacts to air, water, soil, or biological resources, to prevent the unauthorized discharge or disposal of E&P waste, to ensure that E&P waste is properly stored, handled, transported, treated, recycled or disposed to prevent threatened or actual significant adverse environmental impacts, for exceeding the allowable concentrations for soil in Table 910-1 and for failure to complete final reclamation within three (3) months for cropland at the former Stites #1 tank battery located in the NE¼ SE¼ of Section 17, Township 1 South, Range 56 West, 6th P.M., and assesses a fine of One Thousand ($1,000) dollars.

 

 

_________________________________

                                                                                                            Patricia C. Beaver, Secretary

 

Approved:

 

 

__________________________________

            Peter M. Mueller, Chair